WSJ: Major U.S. Crypto Banks Borrow More Than $13 Billion From Federal Banks
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According to The Wall Street Journalthe two largest U.S. crypto banks, Silvergate Capital and Signature Bank, were forced to borrow more than $13 billion in the fourth quarter of 2022 to make up for losses from the mass exodus of customers from the cryptocurrency market.
At the same time, as the publication notes, both cryptocurrency banks received loans from the Federal Home Loan Banks (FHLB) – a cooperative of banks supported by the US government, which was created in the 1930s to issue affordable mortgage loans. Over time, members of the cooperative began to issue loans to representatives of other areas of banking. Now FHLB clients are about 6.5 thousand legal entities, and the total volume of the cooperative fund is $1.1 trillion.
Signature, which started as a mortgage lending bank and then decided to enter the cryptocurrency market, ended up having to borrow about $10 billion in the fourth quarter of 2022. This is one of the largest FHLB loans in the last two years. The bank was forced to borrow such a substantial amount, as at the end of the year the volume of its deposits fell from $103 billion to $89 billion. This was the first time in the history of the company when the volume of deposits of its clients decreased at the end of the year. The main reason for this fall became bankruptcy FTX Group in November last year. As a result, the share of the bank’s cryptocurrency clients in the total volume of deposits decreased in the fourth quarter from 25% to 15%.
Silvergate, in turn, is a partner of the Binance US cryptocurrency exchange. Silvergate’s average cryptocurrency client deposits totaled $7.3 billion in the fourth quarter, up from $12 billion in the third quarter. As a result, the bank ended the fourth quarter of 2022 with a net loss of $1 billion, while the bank recorded a profit of $40.6 million in the third quarter and a profit of $18.4 million in the last quarter of 2021.
About the history of the FTX Group – in the material “Kommersant” “Geek Corporation”.
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